Veidekke's Economic Activity Report: Tough times for residential, but new opportunities in other segments

Veidekke's Economic Activity Report: Tough times for residential, but new opportunities in other segments

12.03.2018 - 12:00

Veidekke predicts tougher times for the Scandinavian construction and civil engineering industry going forwards due to the downturn in the market for apartments, but sees interesting opportunities in civil engineering and other building segments.

Veidekke has downscaled its forecast for the Scandinavian construction and civil engineering market to 5% for 2018 and to -2% for 2019 since its previous Economic Activity Report. "As reported in our Q4 presentation, the decline experienced by property developers as a result of lower sales of apartments will eventually manifest itself in the construction segment, and although the outlook is bright in other segments, the upturn here will not compensate for the fall in residential," explains Kristoffer Eide Hoen, Director of Analysis in Veidekke ASA. He believes the decline in the residential sector will entail challenges for companies that have tied up capital or an organisation dimensioned for the market situation when the market was at its peak in 2016.

For the construction and civil engineering industry as a whole, however, Veidekke does not see any reason to overdramatise. The forecasts for 2018 and 2019 identify several positives for the industry as a whole:

The market situation for other construction segments and for civil engineering is still promising, and the overall construction and civil engineering market is expected to remain at a high level in 2019.

Less activity in the residential market in and around Oslo and Stockholm will ease the capacity challenges that might otherwise have pushed costs up further and resulted in lower quality in deliveries.

Internationally and also nationally, to some extent, the economy looks healthier than it has done for a long time, which will help ensure the downturn in the residential market is short-lived.

Climate change and extreme weather events, the development of renewable energy, and stricter environmental requirements for construction and civil engineering projects are opening new market opportunities in the green part of the construction and civil engineering sector.

Our full analysis for the Scandinavian construction and civil engineering market can be read on Veidekke.com.

Subscribe to notices from Veidekke Veidekke is one of Scandinavia's largest construction and property development companies. The company undertakes all types of building construction and civil engineering contracts, develops residential projects, maintains roads, and produces asphalt and aggregates. The company is known for its involvement and local knowledge. Its annual turnover is NOK 32 billion, and half of its 8,000 employees own shares in the company. Veidekke is listed on the Oslo Stock Exchange and has always posted a profit since it was founded in 1936.